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Asset Preservation Advisors


State: GA

APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Annuities and Tax-Saving

Benefits and Disadvantages of annuities as a tax-saving strategy

When it comes to strategies to save on taxes, annuities are not the go-to avenue, according to a Spectrem Group survey of investors with over $500,000 of investible assets. Asked to rate eight options, annuities ranked overall ahead only of life insurance and reverse mortgages. The most preferred method was to employ a good tax advisor, followed by a regular IRA, a Roth IRA, real estate and bonds.

 Annuities were most likely to be preferred by Millionaire investors with a net worth between $1 and 5 million as well as retirees and those who do not participate in a 401(k).

Annuities are contracts backed by insurance companies. Like IRAs, they allow assets to grow and compound tax deferred. Unlike IRAs, there is no contribution limit, and one can defer taxes until the money is withdrawn.  However, as with a Roth IRA, there is no upfront tax break on contributions.

Among the advantages of annuities is guaranteed lifetime income as well as principal protection. If one should die during the annuity’s accumulation period, the designated beneficiary is guaranteed reimbursement of the original investment amount.

Those with a more moderate or aggressive investment risk tolerance may find annuities too conservative. Retirement income is secure, but one may not see gains afforded by other strategies such as stocks (or losses, for that matter). Annuities are also typically less flexible than other retirement options. Once an annuity is purchased, investors do not have access to that money and thus might not be suited to cover unexpected or emergency expenses.

There are also several types of annuities whose reputations are not as stellar as fixed annuities. Annuities are generally considered to have higher management or even hidden fees.

An increasingly popular form of annuity, especially for Conservative investors, is the variable annuity. You can read more about them here: ../Content_Free/investors-seek-annuities-extra-guarantees